Did FDIC Ask Signature Buyers To Stop All Crypto Business?

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A representative from the FDIC has refuted claims that a prospective purchaser of Signature Bank is required to relinquish all dealings related to cryptocurrency as a condition of the acquisition.

A spokesperson from the Federal Deposit Insurance Corporation (FDIC) in the United States has dismissed the idea that a potential rescuer of Signature Bank would have to sell off any involvement with cryptocurrency as a condition of the rescue plan.

According to a Reuters report on March 17, two sources claimed that a potential buyer of Signature Bank would have to relinquish all cryptocurrency-related operations at the bank. However, a spokesperson from the FDIC informed Reuters that the agency would not mandate divestment of crypto activities as a condition of the sale.

The spokesperson also referred to earlier statements made by FDIC Chairman Martin Gruenberg, which indicated that the agency was not seeking to prohibit any specific banking activities, as reported by Reuters.

The FDIC regulators have requested that banks interested in purchasing failed U.S. banks such as Silicon Valley Bank (SVB) and Signature Bank submit their bids by March 17th.

As per the report, the FDIC will solely accept offers from banks with an existing bank charter and will give priority to traditional lenders over private equity firms. The report cites two anonymous sources who are familiar with the matter. The FDIC intends to sell the entire businesses of both SVB and Signature, however, they may consider offers for portions of the banks if they are unable to sell the entire companies.

Signature, a bank based in New York, is a significant supporter of the cryptocurrency industry in the United States. The bank has established several partnerships in the crypto industry, providing services to firms such as Coinbase exchange, stablecoin issuer Paxos Trust, crypto custodian BitGo, and bankrupt crypto lender Celsius, among others.

This news comes at a time when U.S. Representative Tom Emmer has sent a letter to the FDIC, expressing concerns that the federal government is exploiting issues related to the banking industry to target cryptocurrencies.

Emmer stated in his letter to FDIC Chairman Martin Gruenberg, "These efforts to exploit recent instability in the banking sector, brought about by catastrophic government spending and unprecedented interest rate hikes, are highly inappropriate and could lead to broader financial instability."

On March 12th, the New York State Department of Financial Services officially shut down and assumed control of Signature Bank, and the FDIC was appointed as the receiver. To safeguard depositors, the FDIC relocated all of Signature Bank's deposits and a majority of its assets to Signature Bridge Bank, a comprehensive banking institution that will be managed by the FDIC as it seeks potential buyers for the institution.

Barney Frank, a former member of the U.S. House of Representatives, stated that New York regulators shut down Signature Bank despite the bank not being insolvent. Frank suspected that the move was intended to demonstrate power over the cryptocurrency industry and was a "powerful anti-crypto message." However, in January, the FDIC stated that it did not prohibit or discourage banks from providing banking services to customers of any specific class or type, as permitted by law or regulation.

Subsequent reports indicated that Joseph DePaolo, the CEO of Signature, and Stephen Wyremski, the Chief Financial Officer, are accused of perpetrating fraud by falsely stating that the bank was financially stable, just three days before it was closed. Furthermore, the bank is said to have undergone an investigation for suspected involvement in money laundering.

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